Lindsay Corporation Reports Fiscal 2020 Fourth Quarter and Full Year Results

Rhea-AI Summary

Lindsay Corporation (LNN) reported a strong Q4 for fiscal 2020, with revenues of $128.4 million, up 26% from $101.9 million year-over-year. Net earnings surged to $14.7 million or $1.35 per diluted share compared to $1.5 million or $0.14 per share last year. For the full year, revenues reached $474.7 million, reflecting a 7% increase, while net earnings rose to $38.6 million or $3.56 per share. The company highlighted significant growth in both irrigation and infrastructure segments, especially driven by the Road Zipper® project in the U.K.

Positive

• Q4 revenues increased by 26% year-over-year to $128.4 million.
• Net earnings for Q4 rose to $14.7 million from $1.5 million in the previous year.
• Annual revenues grew by 7% to $474.7 million.
• Net earnings for the year improved to $38.6 million from $2.2 million in the prior year.
• Infrastructure segment revenues surged by 63%, primarily due to Road Zipper System® sales.

Negative

• North America irrigation revenues decreased by 4% due to lower engineering services revenue.
• Irrigation segment operating margin was impacted by $1.6 million in additional expenses.

OMAHA, Neb.--(BUSINESS WIRE)--Lindsay Corporation (NYSE: LNN), a leading global manufacturer and distributor of irrigation and infrastructure equipment and technology, today announced results for its fourth quarter and fiscal year, which ended on August 31, 2020.

Fourth Quarter and Full Year Summary

Revenues for the fourth quarter of fiscal 2020 were $128.4 million, an increase of $26.5 million, or 26 percent, compared to revenues of $101.9 million in the prior year fourth quarter. Net earnings for the quarter were $14.7 million, or $1.35 per diluted share, compared with net earnings of $1.5 million, or $0.14 per diluted share, for the prior year fourth quarter. Net earnings for the prior year fourth quarter adjusted to eliminate costs associated with the Foundation for Growth initiative and a valuation adjustment for indirect tax credits were $5.8 million, or $0.54 per diluted share.¹

Revenues for the year ended August 31, 2020, were $474.7 million, an increase of $30.6 million, or 7 percent, compared to revenues of $444.1 million in the prior year. Net earnings for the year were $38.6 million, or $3.56 per diluted share, compared with net earnings of $2.2 million, or $0.20 per diluted share, in the prior year. Net earnings for the prior year adjusted to eliminate costs associated with the Foundation for Growth initiative and a valuation adjustment for indirect tax credits were $15.6 million, or $1.45 per diluted share.¹

“We were pleased to see fourth quarter revenue growth in both our Irrigation and Infrastructure segments, highlighted by the successful execution of our large Road Zipper^® project with Highways England in the U.K.,” said Tim Hassinger, President and Chief Executive Officer. “I am proud of the Lindsay team for achieving our 2020 operating margin goal, especially given the additional market challenges presented by the coronavirus pandemic. We achieved another key objective related to culture, measured through an organizational health assessment conducted by a major consulting firm.”

Fourth Quarter Segment Results

Irrigation segment revenues for the fourth quarter of fiscal 2020 were $75.6 million, an increase of $6.1 million, or 9 percent, compared to $69.5 million in the prior year fourth quarter. North America irrigation revenues of $39.8 million decreased $1.8 million, or 4 percent, compared to the prior year. The decrease resulted primarily from lower engineering services revenue related to a project in the prior year that did not repeat. An increase in irrigation equipment unit volume and higher sales of replacement parts was offset by the impact of lower average selling prices. International irrigation revenues of $35.8 million increased $7.8 million, or 28 percent. The increase resulted primarily from higher sales volumes in Brazil, Australia and the Middle East which were partially offset by the unfavorable effects of foreign currency translation of approximately $3.4 million compared to the prior year.

Irrigation segment operating margin was 7.7 percent of sales in the fourth quarter, compared to 5.0 percent of sales (9.0 percent adjusted)¹ in the prior year fourth quarter. Operating margin in the current year fourth quarter was negatively impacted by expense of approximately $1.6 million, related to an increase in the environmental remediation liability and severance costs.

Infrastructure segment revenues for the fourth quarter of fiscal 2020 were $52.8 million, an increase of $20.4 million, or 63 percent, compared to $32.4 million in the prior year. The increase resulted from higher Road Zipper System^® sales compared to the prior year, including the large project with Highways England in the U.K.

Infrastructure segment operating margin was 38.0 percent of sales in the fourth quarter, compared to 28.8 percent of sales in the prior year fourth quarter. Operating margin improvement resulted primarily from increased sales in higher margin product lines and from improved cost and pricing performance.

The backlog of unfilled orders at August 31, 2020 was $58.7 million compared with $55.4 million at August 31, 2019. Included in these backlogs are amounts of $6.3 million and $10.0 million, respectively, that are not expected to be fulfilled within the subsequent twelve months.

Outlook

“The recent increase in agricultural commodity prices along with additional government support payments to farmers under the expanded Coronavirus Food Assistance Program have raised estimates for U.S. farm income,” said Mr. Hassinger. “This supports an improved outlook for North America irrigation equipment demand for the fall selling season. We expect growth in international irrigation led by continued momentum in Brazil and other markets as well as new agricultural development being driven by heightened food security concerns as a result of the global coronavirus pandemic.”

Mr. Hassinger added, “Our infrastructure business achieved a record year in fiscal 2020, in large part due to our success in implementing the “shift left” strategy to expand our addressable market for Road Zipper^® systems. We continue to be encouraged by the execution of this strategy, which has resulted in a higher quality sales funnel.”

Fourth Quarter Conference Call

Lindsay’s fiscal 2020 fourth quarter investor conference call is scheduled for 11:00 a.m. Eastern Time today. Interested investors may participate in the call by dialing (833) 535-2202 in the U.S., or (412) 902-6745 internationally, and requesting the Lindsay Corporation call. Additionally, the conference call will be simulcast live on the Internet and can be accessed via the investor relations section of the Company's Web site, www.lindsay.com. Replays of the conference call will remain on our Web site through the next quarterly earnings release. The Company will have a slide presentation available to augment management's formal presentation, which will also be accessible via the Company's Web site.

1 Please see Reg G reconciliation of GAAP operating income, net earnings and diluted earnings per share to adjusted figures at end of document.

About the Company

Lindsay Corporation (NYSE: LNN) is a leading global manufacturer and distributor of irrigation and infrastructure equipment and technology. Established in 1955, the company has been at the forefront of research and development of innovative solutions to meet the food, fuel, fiber and transportation needs of the world’s rapidly growing population. The Lindsay family of irrigation brands includes Zimmatic^® center pivot and lateral move agricultural irrigation systems and FieldNET^® remote irrigation management and scheduling technology, as well as irrigation consulting and design and industrial IoT solutions. Also a global leader in the transportation industry, Lindsay Transportation Solutions manufactures equipment to improve road safety and keep traffic moving on the world’s roads, bridges and tunnels, through the Barrier Systems^®, Road Zipper^® and Snoline™ brands. For more information about Lindsay Corporation, visit www.lindsay.com.

Concerning Forward-looking Statements

This release contains forward-looking statements that are subject to risks and uncertainties and which reflect management’s current beliefs and estimates of future economic circumstances, industry conditions, Company performance and financial results. You can find a discussion of many of these risks and uncertainties in the annual, quarterly and current reports that the Company files with the Securities and Exchange Commission. Forward-looking statements include information concerning possible or assumed future results of operations and planned financing of the Company and those statements preceded by, followed by or including the words “anticipate,” “estimate,” “believe,” “intend,” "expect," "outlook," "could," "may," "should," “will,” or similar expressions. For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The Company undertakes no obligation to update any forward-looking information contained in this press release.

LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
		Three Months Ended August 31,										Years Ended August 31,
(in thousands, except per share amounts)			2020					2019					2020					2019
Operating revenues		$		128,405			$		101,885			$		474,692			$		444,072
Cost of operating revenues				83,038					70,398					322,149					329,464
Gross profit				45,367					31,487					152,543					114,608
Operating expenses:
Selling expense				9,343					6,886					31,444					30,820
General and administrative expense				14,921					17,152					52,947					63,737
Engineering and research expense				3,647					3,389					13,950					13,936
Total operating expenses				27,911					27,427					98,341					108,493
Operating income				17,456					4,060					54,202					6,115
Other income (expense):
Interest expense				(1,185	)				(1,215	)				(4,759	)				(4,767	)
Interest income				544					472					1,956					2,402
Other income (expense), net				1,641					(1,052	)				(2,556	)				(1,643	)
Total other income (expense)				1,000					(1,795	)				(5,359	)				(4,008	)
Earnings before income taxes				18,456					2,265					48,843					2,107
Income tax expense (benefit)				3,782					762					10,214					(65	)
Net earnings		$		14,674			$		1,503			$		38,629			$		2,172
Earnings per share:
Basic		$		1.35			$		0.14			$		3.57			$		0.20
Diluted		$		1.35			$		0.14			$		3.56			$		0.20
Shares used in computing earnings per share:
Basic				10,835					10,786					10,823					10,781
Diluted				10,880					10,817					10,861					10,810
Cash dividends declared per share		$		0.32			$		0.31			$		1.26			$		1.24

LINDSAY CORPORATION AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Unaudited)
		Three months ended											Twelve months ended
(in thousands)			August 31, 2020					August 31, 2019					August 31, 2020					August 31, 2019
Operating revenues:
Irrigation:
North America		$		39,757			$		41,509			$		218,954			$		218,627
International				35,824					27,995					124,575					132,871
Irrigation total				75,581					69,504					343,529					351,498
Infrastructure				52,824					32,381					131,163					92,574
Total operating revenues		$		128,405			$		101,885			$		474,692			$		444,072
Operating income:
Irrigation		$		5,829			$		3,463			$		40,214			$		29,804
Infrastructure				20,085					9,340					43,771					16,599
Corporate				(8,458	)				(8,743	)				(29,783	)				(40,288	)
Total operating income		$		17,456			$		4,060			$		54,202			$		6,115

The Company manages its business activities in two reportable segments as follows:

Irrigation - This reporting segment includes the manufacture and marketing of center pivot, lateral move, and hose reel irrigation systems, as well as various innovative technology solutions such as GPS positioning and guidance, variable rate irrigation, remote irrigation management and scheduling technology, irrigation consulting and design and industrial IoT solutions.

Infrastructure – This reporting segment includes the manufacture and marketing of moveable barriers, specialty barriers, crash cushions and end terminals, and road marking and road safety equipment.

LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)				August 31, 2020					August 31, 2019
ASSETS
Current assets:
Cash and cash equivalents				$		121,403			$		127,204
Marketable securities						19,511					—
Receivables, net of allowance of $2,780 and $2,635, respectively						84,604					75,551
Inventories, net						104,792					92,287
Assets held-for-sale						—					2,744
Other current assets						17,625					15,704
Total current assets						347,935					313,490
Property, plant, and equipment, net						79,581					68,968
Intangible assets, net						23,477					24,382
Goodwill						68,004					64,387
Operating lease right-of-use assets						27,457					—
Deferred income tax assets						9,935					11,758
Other noncurrent assets						14,137					17,329
Total assets				$		570,526			$		500,314
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable				$		29,554			$		29,434
Current portion of long-term debt						195					209
Other current liabilities						72,646					52,488
Total current liabilities						102,395					82,131
Pension benefits liabilities						6,374					6,029
Long-term debt						115,682					115,846
Operating lease liabilities						25,862					—
Deferred income tax liabilities						889					872
Other noncurrent liabilities						20,806					27,227
Total liabilities						272,008					232,105
Shareholders' equity:
Preferred stock						—					—
Common stock						18,918					18,870
Capital in excess of stated value						77,686					71,684
Retained earnings						499,724					474,740
Less treasury stock - at cost						(277,238	)				(277,238	)
Accumulated other comprehensive loss, net						(20,572	)				(19,847	)
Total shareholders' equity						298,518					268,209
Total liabilities and shareholders' equity				$		570,526			$		500,314

LINDSAY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
		Years Ended August 31,
(in thousands)			2020					2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings		$		38,629			$		2,172
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation and amortization				19,396					14,018
Gain on sale of property and equipment				(1,158	)				26
Loss on sale of businesses				—					301
Provision (benefit) for uncollectible accounts receivable				589					(496	)
Deferred income taxes				1,384					(5,686	)
Share-based compensation expense				5,616					4,195
Valuation adjustment for indirect tax credits				—					2,795
Foreign currency transaction loss				1,102					709
Other, net				1,446					246
Changes in assets and liabilities:
Receivables				(9,523	)				(7,969	)
Inventories				(14,039	)				(16,187	)
Other current assets				(6,612	)				173
Accounts payable				(691	)				2,119
Other current liabilities				16,673					2,629
Other noncurrent assets and liabilities				(6,778	)				4,752
Net cash provided by operating activities				46,034					3,797
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment				(21,445	)				(23,211	)
Proceeds from sale of assets held-for-sale				3,955					—
Purchases of marketable securities available-for-sale				(28,041	)				—
Proceeds from maturities of marketable securities available-for-sale				8,548					—
Proceeds from settlement of net investment hedges				1,503					2,262
Payments for settlement of net investment hedges				—					(327	)
Acquisition of business, net of cash acquired				(3,034	)				—
Other investing activities, net				—					57
Net cash used in investing activities				(38,514	)				(21,219	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options				1,545					177
Common stock withheld for payroll tax obligations				(1,111	)				(1,124	)
Principal payments on long-term debt				(227	)				(205	)
Payment of debt issuance costs				—					(115	)
Dividends paid				(13,645	)				(13,375	)
Cash and cash equivalents, end of period				(13,438	)				(14,642	)
Effect of exchange rate changes on cash and cash equivalents				117					(1,519	)
Net change in cash and cash equivalents				(5,801	)				(33,583	)
Cash and cash equivalents, beginning of period				127,204					160,787
Cash and cash equivalents, end of period		$		121,403			$		127,204

LINDSAY CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)

The non-GAAP tables below disclose (a) the impact on diluted earnings per share of (1) consulting fees, severance costs and loss from business divestitures, associated with the Company's Foundation for Growth Initiative ("FFG costs"), and (2) a valuation adjustment for indirect tax credits in a foreign jurisdiction (“valuation adjustment”), (b) the impact on operating income of FFG costs and the valuation adjustment, and (c) the impact on segment operating income of FFG costs and the valuation adjustment. Management believes adjusted net earnings, adjusted diluted earnings per share and adjusted operating income are important indicators of the Company’s business performance because they exclude items that may not be indicative of, or may be unrelated to, the Company’s underlying operating results, and provide a useful baseline for analyzing trends in the business. Non-GAAP measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures. These adjusted financial measures should not be considered in isolation or as a substitute for reported net earnings, diluted earnings per share and operating income. These non-GAAP financial measures reflect an additional way of viewing the Company’s operations that, when viewed with the GAAP results and the following reconciliations to the corresponding GAAP financial measures, management believes provides a more complete understanding of the Company’s business.

		Three months ended								Twelve months ended
(in thousands, except per share amounts)		August 31, 2019				Diluted earnings per share				August 31, 2019				Diluted earnings per share
Net earnings - reported GAAP measure		$	1,503			$	0.14			$	2,172			$	0.20
FFG costs - pre-tax			1,947				0.18				15,113				1.40
Valuation adjustment - pre-tax			2,795				0.26				2,795				0.26
Total adjustments			4,742				0.44				17,908				1.66
Tax effect of adjustments*			(428	)			(0.04	)			(4,454	)			(0.41	)
Net earnings - adjusted		$	5,817			$	0.54			$	15,626			$	1.45
Average shares outstanding - diluted							10,816								10,810
* The tax effect of adjustments is calculated based on the income tax rate in each applicable jurisdiction.
		Three months ended August 31, 2019
Operating income reconciliation		Consolidated				Irrigation				Infrastructure				Corporate
Operating income - reported GAAP measure		$	4,060			$	3,463			$	9,340			$	(8,743	)
FFG costs			1,947				—				—				1,947
Valuation adjustment			2,795				2,795				—				—
Adjusted operating income		$	8,802			$	6,258			$	9,340			$	(6,796	)
Operating revenues		$	101,885			$	69,504			$	32,381			$	—
Operating income as a percent of operating revenues			4.0	%			5.0	%			28.8	%		N/A
Adjusted operating income as a percent of operating revenues			8.6	%			9.0	%			28.8	%		N/A
		Twelve months ended August 31, 2019
Operating income reconciliation		Consolidated				Irrigation				Infrastructure				Corporate
Operating income - reported GAAP measure		$	6,115			$	29,804			$	16,599			$	(40,288	)
FFG costs			15,113				676				188				14,249
Valuation adjustment			2,795				2,795				—				—
Adjusted operating income		$	24,023			$	33,275			$	16,787			$	(26,039	)
Operating revenues		$	444,072			$	351,498			$	92,574			$	—
Operating income as a percent of operating revenues			1.4	%			8.5	%			17.9	%		N/A
Adjusted operating income as a percent of operating revenues			5.4	%			9.5	%			18.1	%		N/A